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Brexit, The Importance Of Healthy Cash Flow and How a Much Needed Cash Injection Can Help Sustain UK SMEs

Estimated Read Time: 4 Minutes

JESSICA LAMBERT , 26 January, 2023

SMEs are the backbone of our economy, accounting for 99.9% of all private sector businesses. They contribute hugely to the UK’s wealth, with a combined annual turnover of £2 trillion in 2018 alone. Given that they employ almost 16 and a half million people, it is important that SMEs are provided with the support needed to enable them to thrive.

How exactly do you enable SMEs to thrive? Well, one of the most important factors in whether a business is successful is its ability to access cash when required. Capital injection plays a huge role in how well a business operates and with the extra money at its disposal, a business can increase its profit margins, hire additional staff, expand into new markets and launch additional services and products.

Why Healthy Cash Flow Is the Key to Business Success

You will struggle to find a booming SME that is strapped for cash. The reality is that businesses need access to funds to sustain daily operations and if they are to ever grow and flourish as they anticipate, funding within their reach is not just preferable but absolutely a necessity.

The problem for SMEs arises from an unwillingness to borrow money externally at all. Sadly, businesses still don’t feel entirely comfortable with taking out commercial loans and instead struggle on trying to make ends meet, despite there being plenty of funding sources available.

A recent report by the SME Finance Monitor found that SME attitudes to taking out external finance still remain cautious, with the number of permanent non-borrowers barely budging, meaning almost 50% of all SMEs are not willing to access external funding sources.

The same report also confirmed that the majority of SMEs remain self-reliant, with 80% stating that their plans are based on what they can afford themselves. In fact, 73% claimed to prefer slower growth over borrowing to meet growth ambitions sooner.

SMEs with little to no access to funds don’t generally tend to beat the odds of surviving past the five-year mark and it is often a real loss to the markets they previously operated in. Healthy cash flow is a fundamental part of running a successful business, yet so many SMEs are consistently reluctant to access the funding they really need to operate as intended.

There are various funding options available to businesses, with both secured and unsecured commercial loans on offer for SMEs. Cash Flow Finance

Uncertainty Is Fruitless in The World of Business

With Brexit uncertainty showing no signs of fading imminently, the future of many SMEs may well remain murky until confidence in borrowing increases. The climate for businesses in general has not been the most accommodating in recent years, but that is the case more so than ever with the current uncertainty caused by both political and economic instability.

The implications of Brexit and the furore surrounding it are wider reaching for UK SMEs. Our recent research identified that 28% of smaller businesses are concerned about the political uncertainty caused by Brexit and this has meant they are more hesitant to take out external finance.

Our survey on 500 UK SMEs also found that 10% of respondents decided not to go through with their funding application due to economic uncertainty. Additionally, a fifth responded by saying they had planned to take out external finance but opted to put those plans on hold.

What does this mean for business? Well, it is by no means a good thing for anyone. Consequently, almost a million SMEs have denied themselves the opportunity to grow with the assistance of extra capital which could prove to be a memorable mistake in an already hugely competitive business landscape.

If you consider that the mid-point application for additional finance stands at £35,000, this equates to £20bn worth of SME funding failing to be utilised by businesses who need it most.

Whilst larger, established businesses can get by without using external finance, for the majority of SMEs, the ability to access funding and feeling comfortable with the idea can make all the difference in business survival rates.

Being able to plan ahead is massively vital for businesses and with economic uncertainty still lurking, it is important that SMEs know where to look should they feel that additional funding is required. Exploring the funding options available is one sure-fire way to stay ahead of the competition and access to working capital will ensure that businesses are able to comfortably navigate the rough waters the fallout from Brexit may well trigger.

For more SME advice and tips, read our related posts below. If you are experiencing cash flow challenges or want to realise your business growth plans, get in touch with our team of Funding Specialists today on 020 7839 9451 or email [email protected].





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